Article:
Spurring Lift-Off: Taiwan’s Indigenous Drone Industry

January 28, 2026
Article on Taiwan’s indigenous drone industry by US-Taiwan Business Council Executive Vice President Lotta Danielsson for The National Bureau of Asian Research. The article is part of a Roundtable in Asia Policy 21.1 called “Taiwan at a Techno-Geopolitical Nexus. Challenges and Opportunities across Critical Technologies.”

NBR Summary

Lotta Danielsson examines Taiwan’s domestic drone industry as a key pillar of its evolving defense strategy and a major opportunity for collaboration with security partners. Under the Lai administration, Taiwan seeks to become a hub for unmanned defense systems in the Asia-Pacific by deepening cooperation—particularly with the United States—through co-development, co-production, interoperability efforts, and streamlined export controls, while supporting firms under PRC pressure. Danielsson argues that success hinges on pairing deeper international cooperation with stronger domestic R&D, workforce development, regulatory coordination, and trusted supply chain and security certification systems to foster innovation, interoperability, and resilience.

Article Outline

• Introduction
• Evolving Government Support for Taiwan’s Defense Industry
• The Pivot to Drones
• International Collaboration
• Challenges
• Policy Options

Excerpt

The Taiwan government has now detailed three major policy goals for the domestic drone industry: industrial development, defense self- sufficiency, and construction of a so-called democratic supply chain. The Lai administration is making every effort to build Taiwan as an unmanned defense hub in the Asia-Pacific, to ally Taiwan with democratic partners, and to support domestic companies as they increase their participation in a rapidly growing global market.

The pivot to drones also allows Taiwan to respond to the ongoing pressure from the United States, where successive administrations have pushed Taiwan to focus on “asymmetric” capabilities—generally understood as using large numbers of mobile, distributed, and low-cost but technologically advanced systems to counter a larger conventional military. There are differences of opinion on the efficacy of this approach and on what an “asymmetric” capability truly looks like, but drones appear to meet these U.S. government requirements.

The Taiwan government has additional options to further develop collaboration with the United States on drones. One could be pursuing a formal cooperation agreement with the United States like the recent U.S. initiative with India, given that both sides see drones as offering new opportunities. The National Defense Authorization Act for Fiscal Year 2026 directs the Pentagon to work with Taiwan on uncrewed and counter-uncrewed systems capabilities, including co-development and co- production, which could serve as an excellent starting point.48 In addition, U.S. and Taiwan industry cooperation could also help support drone interoperability between U.S. and Taiwan military forces. The two sides could fast-track the export control process, align export control rules, and provide support for smaller companies to reduce their burdens, such as streamlined and simplified due-diligence investigations and training to meet cybersecurity certifications. Both sides could also offer additional support to companies sanctioned by China, such as priority consideration for government contracts, to compensate them for taking financial and reputational risks.

Taipei could further address some of the specific challenges for domestic companies, such as promoting R&D projects through public- private partnerships with public research institutions and universities. Such collaboration helped develop the Taiwan technology sector. NCIST and several universities have already formed an alliance to help cultivate talent, accelerate scientific and production breakthroughs, and integrate artificial intelligence and other emerging technologies into the drone industry. The Lai government could fund university programs and training initiatives for a drone-capable workforce, fast-track the consolidation of overlapping authority among agencies and localities to provide additional testing airspace, and offer backing for local companies attempting to meet the Blue UAS Cleared List requirements.

The two most significant changes that could help support the further development of Taiwan’s domestic drone industry include developing a comprehensive “non-red” certification process for suppliers and a wide- ranging security clearance system that reaches beyond the large formerly state-owned companies. These would allow U.S. company partners to build a firewall around joint Taiwan manufacturing processes and inhibit PRC interference and espionage.

The global drone industry is changing rapidly, and agility and perseverance will be required from both companies and governments to take advantage of the field’s business opportunities. While many challenges remain, ongoing Taiwan government support—in addition to substantial focus by European and U.S. companies on work with Taiwan producers—should allow Taiwan’s domestic drone sector to lift off.

A challenge to developing Taiwan’s indigenous drone industry is the relative dearth of testing airspace in Taiwan.